The question referred to this Court under sub-section (2) of section 66 of the Indian Income-tax Act, is "Whether the assessee is entitled to claim that the tax paid in respect of S. Y. 2001 be refunded to it under section 25 (4) and/or section 48 of the Indian Income-tax Act." The assessee is an undivided Hindu family carrying on business in kirana. The assessee paid tax under the Indian Income-tax Act, 1981.
The assessment year with which we are concerned is 1946-47, and the relevant account period is the year ending with Diwali 1945, i.e. 4th November, 1945. On 25th July 1946, the assessee submitted a return of his income showing a total income of Rs. 17,417. He did not claim in the assessment year that the status if the Hindu undivided family had come to an end in the account year and that there was any succession.
The assessment was computed by the Income-tax Officer on 16th February 1947 on a total income of Rs. 39,009. On appeal to the Appellate Assistant Commissioner certain reductions were made in the income by the appellate order passed on 13th July 1948. A second appeal was preferred to the Income-tax Appellate Tribunal which further reduced the assessable income in the final order passed on 26th July 1949.
3. On 24th May 1950 the assessee made an application saying that the status of the Hindu undivided family had come to an end with the Diwali of 1945 and thereafter the family constituted itself into a partnership on 4th November 1945. The assessee, therefore claimed refund of the tax paid relying on sub-section (4) of section 25 of the Act and section 48(1). According to the assessee because of the succession as a result of the income, profits and gains of the period between the end of the previous year and the date of succession viz, 4th November, 1945. The second relief which is given to the assessee under sub-section (4) of section 25 that he may further claim that the income profits and gains of the said period is not sought. So, we are not concerned in the instant case with that relief.
4. According to the Department the relief which is claimed by the assessee is barred by time in view of sub-section (5) of section 25 of the Indian Income-tax Act. In any case, the present relief was climbable only during the appropriate assessment year and that not having been done the assessment had become final under sub-section (6) of section 33 of the Act. Further it is submitted that in so far as the assessee invokes section 48(1) relief under that sub-section cannot be given to the assessee by reason of sub-section (4) of that very section. Finally Shri Hajarnavis submits for the Department that the assess cannot, once there has been an assessment be given relief on the ground that the income was not liable to tax and to so hold would be to revise the assessment contrary to sub-section (4) of section 48.
5. For the assessee it is submitted that he is not asking the Court to revise the assessment but it is open to him to point out that the income was not liable to tax at all in the assessment year and he could obtain that relief so long as he is not challenging the total income as computed in the assessment year.
"No claim of the relief afforded under sub-section (3) or sub-section (4) shall be entertained unless it is made before the expiry of one year from the date on which the business profession or vocation was discontinued or the succession took place as the case may be".
In the instant case the succession took place on 4th November, 1945. If the case is governed by sub-section (5) of section 25, then the assessee cannot obtain any relief because the relief was not sought until 24th May, 1950. The presence of the words "may further claim" in subsection (4) seems to support the view that the exemption from liability to tax in respect of the income between the end of the previous year and the date of the succession is to be claimed within the period mentioned in sub-section (5) just as to the right to have the income of the previous year deemed to have been the income of the said period.
7. But the Madras High Court has expressed itself to the contrary in Meyyappa Chettiar v. Commissioner of Income-tax, Madras. The Bombay High Court also seems to be inclined to the view that sub-section (5) only governs the claim to have the income of the previous year deemed to be the income of the said period and not the exemption from the tax liability : Ambaram Kalidas v. Commissioner of Income-tax. But both the decisions are distinguishable. In the Madras decision, the assessees exemption from liability to the payment of tax was urged unlike in the instant case, in the succeeding assessment for the relevant year. In the Bombay case, the Court ruled that the exemption from liability could not be claimed in the assessment year (1945-46) under consideration then but in the succeeding assessment year (1946-47).
Neither case can be said to involve a claim to refund so as to disturb the assessment or other matter which can be said to have become final.
That being so, the cited decisions do not support the contention that the refund can be claimed a year after the Tribunal finally disposed of the case of the assessee for the relevant year. So it is not necessary for us to say whether the view taken in Madras and Bombay is correct.
8. Even granting that sub-section (5) of section 25 does not come in the way of the assessee the question still remains whether the assessee can invoke sub-section (1) of section 48 of the Act. That sub-section empowers the Income-tax officer or other authority appointed by the Central Government in this behalf to order refund of tax if the assessee is satisfied that the amount of tax paid by him or on his behalf or treated as paid on his behalf for by year exceeds the amount with which he is properly chargeable under the Act for that year.
This sub-section cannot be construed in isolation but as to be construed with what is provided in sub-section (4) of that very section. Sub-section (4) of section 48 in so far as it is material here reads : "Nothing in this section shall operate... to authorise the revision of any assessment or other matter which has become final or conclusive..." 9. There is much debate at the bar as to what is meant by "the revision of assessment." On the one hand, it is contended for the assessee that "assessment" means merely the computation of the total income and not the determination of the amount of the tax to which the income so computed is liable. On the other hand, it is contended for the Department, relying on Commissioner of Income-tax, Bombay and Aden v.Khemchand Ramdas, that the connotation of the word "assessment" varies according to the context and in sub-section (4) of section 48 it means not only the computation of the income but also the determination of the amount of tax payable. We are inclined to accept the latter contention but the presence of the words "or other matter" in sub-section (4) of section 48 relieves us of the necessity of finally pronouncing on the merits of the respective contentions. "Other matter" is wide enough to cover the determination of the amount of the tax payable which must be held to have become final by virtue of sub-section (6) of section 33. We cannot accept the contention of the assessee that the income for the period ending Diwali 1945 was not liable to tax without disturbing the finality of the order of the Tribunal relating to the tax payable on that income.
10. The words "properly chargeable under this Act" in sub-section (1) cannot be so interpreted as to permit the assessee to show whether the income is properly chargeable to tax or not in any year other than the year in which there has been an assessment. Whether the income is properly chargeable or not is to be shown in the course of assessment for the relevant year unless there has been no assessment at all as for instance when the assessees income was below the taxable limit. In the latter case refund may for example be climbable on the ground that the tax was already deducted at source though the income was not properly chargeable. The assessee can show the impropriety of the charge so long as the authority can order refund without revising "any assessment or other matter which has become final and conclusive." 11. The assessee in the present case was aware that succession did take place on 4th November, 1945. So, nothing prevented him from showing in the relevant assessment year that the income was not properly chargeable under the Act because of sub-section (4) of section 25. We cannot accept the contention for the assessee that he had to wait till the partnership was registered by the Department. Unlike in Mr. Justice Iqbal Ahmad, In re the Department cannot in the present case be said to have been aware in the assessment year (1946-47) of any facts entitling the assessee to relief under section 25(4). The Authorities did not know of the succession until 1950. The assessee not having raised the contention in the appropriate assessment year and having allowed the assessment or the order as to the amount of tax payable by him to become final cannot now be permitted to have a second chance which in effect would mean disregarding the limitation in sub-section (4) of section 48.
12. In the result we answer the question in negative. Costs of this reference shall be borne by the assessee. Counsels fee Rs. 150.